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20Sales: How Snowflake Built a Sales Machine | Why You Have to Hire a CRO Pre-Product | Why Most Sales Reps Do Not Perform | Why Hiring Panels are BS in Interviews | Why Remote Sales Reps Do Not Care About Their Development with Chad Peets
Fri, 23 Aug 2024
Chad Peets is one of the greatest sales leaders and recruiters of the last 25 years. From 2018 to 2023, Chad was a Managing Director at Sutter Hill Ventures. Chad has worked with the world's best CEOs and CROs to build world-class go-to-market organizations. Chad is currently a member of the Board of Directors for Lacework and Luminary Cloud and on the boards of Clumio and Sigma Computing. He previously served as a board member for Astronomer, Transposit, and others. He was an early-stage investor at Snowflake, Sigma, Observe, Lacework, and Clumio. In Today's Discussion with Chad Peet's We Discuss: 1. You Need a CRO Pre-Product: Why does Chad believe that SaaS companies need a CRO pre-product? Should the founder not be the right person to create the sales playbook? What should the founder look for in their first CRO hire? Does any great CRO really want to go back to an early startup and do it again? 2. What Everyone Gets Wrong in Building Sales Teams: Why are most sales reps not performing? How long does it take for sales teams to ramp? How does this change with PLG and enterprise? What are the benchmarks of good vs great for average sales reps? How do founders and VCs most often hurt their sales teams and performance? 3. How to Build a Hiring Machine: What are the single biggest mistakes people make when hiring sales reps and teams? Are sales people money motivated? How to create comp plans that incentivise and align? Why does Chad believe that any sales rep that does not want to be in the office, is not putting their career and development first? Why is it harder than ever to recruit great sales leaders today? 4. Lessons from Scaling Sales at Snowflake: What are the single biggest lessons of what worked from scaling Snowflake's sales team? What did not work? What would he do differently with the team again? What did Snowflake teach Chad about success and culture and how they interplay together?
We bring in a CRO pre-product. You need a salesperson to create the sales playbook. What does a VP of engineering know about creating a sales playbook? Any inside salesperson should recognize that by being in the office, they are going to get better faster. If a sales inside salesperson is not willing to make the sacrifice of a 30-minute commute every day to further his own career.
I don't want that person. You have to care and be willing to sacrifice to do exceptional things to be exceptional. And what I find today is people are not willing to do that.
This is 20 Sales with me, Harry Stebbings, the show where we sit down with the best sales leaders in the world and unveil their tips and tactics. Today, this is the best 20 sales I have ever done. The guest is an absolute OG. and one of the greatest sales leaders and recruiters of the last 25 years, Chad Peets.
Chad is the man who was instrumental in the hiring process of Snowflake's sales team for the first five years, alongside Chris Degnan. He was then a managing director at Sutter Hill, one of the great firms of the last two decades. This is one of the best, as I said. It's time to get the notebooks out. There's a lot in this one.
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Chad, I don't think I've ever been quite so excited about doing a show following a discussion pre us starting recording. So this is going to be a lot of fun. Thank you for joining me today.
Yeah, no, I appreciate that. Based on the people that you've interviewed in the past, I find that hard to believe, but I'm humbled that you said it. So thank you.
Do you know what? Also, I spoke to Chris Dagnon and Mike Spicer before this show. And if you want like hard heavyweights who are incredible at what they do, saying someone is the best in the world at what they do. I'm like, oh, shit. So I'm looking forward to this. So I want to start off with just a little bit, though, in terms of context. How did you make your way into sales first?
And let's start there.
I'll give you the short version, but I saw the movie Wall Street when I was 12 years old, and I knew I wanted to be a stockbroker. So I went to USC. I studied finance. I graduated from USC. I went to Merrill Lynch to be a stockbroker. And that was 1997 and 1998. And at that time... That industry was changing.
It was becoming a fee-based industry, less about trading stocks and more about just fee-based. And that's not what I wanted to do. One, two, I was turned off a bit because it was such product pushing. By that, I mean, hey, go sell this product to your customers. We're going to charge one and a half points. This is the shit we want you to sell this week.
I didn't feel at the time like, does it matter if that's the right product for the customer? It was just, we're going to go push that product. The other thing that was clear to me was to be successful in that industry, I was going to have to accumulate hundreds of millions of dollars in assets. I was 22 years old. I looked like I was 16.
I would likely have had to call friends and family to raise money, and I was never going to do that. I just simply was not comfortable doing that. At the time, I had a client that came in. I was doing some financial planning for him and his wife said to him, you should hire this kid. And I was all arrogant and shit at the time. I was like 22.
I think I made a hundred grand my first year out of school. I thought it was all the money in the world. And I kind of chuckled. I said, shit, man, you can't afford me. Just arrogant and smug. And he's like, how much money do you make? I said, I make a hundred grand this year. He started laughing at me. He said, you don't even know what real money is. You have no idea.
Put me right in my fucking place. He said, look, I run the largest software sales recruiting firm in the country. I think you could do it. You should come talk to me. Oh, okay. So I went and talked to him and decided I'm going to get into software sales recruiting at 22 years old. Changed my entire path. I had a wife at home.
I was going from making $100,000 to being a recruiter with no base salary. And it was all going to be on me. And my wife said, you're going to do what? I said, yeah, we're going to give this a shot. And first year there, they were the largest firm in the country. I was the number one guy at the company first year there. I was the number one guy at the company every year I was there.
And then in 2001, the bubble burst. The partners turned on each other and basically both tried to hire me away from the others. And I said, hey, look, I can't be in business with people that are – if you guys are going to do this to each other, you're going to do it to me. So I started Pete's & Associates in 2001.
100%.
100%.
You can't teach. Someone either can sell or they can't. You can teach someone to be better, but if they don't have the innate ability to sell, some people are petrified of the phone, right? You'll say, pick up the phone, and they're like, oh, God. You mean I have to speak to somebody on the other side? I just did not have that fear. Right.
I was very comfortable getting somebody on the phone, you know, thinking three steps ahead. I can understand, I think, what your needs are before we start the conversation. And I can think about the objections I think you're going to have before you have them. Use those skills. And I just worked my ass off.
How do you do that? Because most people do like customer discovery where they ask the most inane, annoying questions. You know, what are your most prying challenges? And as a customer, you're like, for fuck's sake, this is a crap experience.
Focus, right? So focus is number one. So all I did was software sales recruiting. So the only people I was calling were software sales reps. So you learn your audience. So if you're a software sales rep and I study you enough, I know what motivates you. I know why you got into software sales. I know why you're sticking with your job. I know what's going to turn you on about the next job.
So when I'm looking at the current company I'm recruiting for, I have to look at the things they have to offer and line those up with what the salesperson is looking for. Very few people understand this. You have to know who the person is you're calling. Look at their background. Look at the jobs they've taken to get to where they are and understand, okay, this is what motivated this person.
By the way, it's also how you avoid calling. 95% of the people that sell software, I don't recruit salespeople anymore, but 95% of the people that sell software, I'm never calling because I can look at your background and say, okay, I know a lot about you because you made this change at this point in time. I know what you were looking for.
And because you were looking for that, you can't be looking for what I have to offer. I'm not calling. It's very targeted. So like my claim to fame when I was doing sales recruiting was two candidates, one hire every time. And so like when Chris and I, if you're going to go now, we're getting off target a little bit, but but.
Chris and I took a sales organization and grew it faster than any sales organization has ever grown in history at Snowflake. There might have been others since that have grown faster, but at the time, nobody's done that, right? And if you're going to scale like that, you can't have 10 interviews per hire, right? It kills the productivity. So my claim to fame was, look, I'll nail this.
I'm going to put two people in front of you. You're going to hire one of them every time. And it's about understanding your audience. And it's about understanding what you have to sell that audience and aligning the two before you even get on the call.
But you mentioned the focus and knowing the customer so intimately well. Wonderful. But what do you do in a world which isn't verticalized sales when you have a horizontal customer base, which could be in aerospace or it could be in fintech and banking? How do you do that when you have a horizontal customer base you're selling?
It doesn't matter. Every company I've ever built is horizontal, to be clear. I've never built a sales organization focused on a particular vertical. I actually don't think that's a great approach. There's companies that have been successful in doing so, but if you're going to sell a product that only goes to one vertical, you're seriously limiting the size that the company can be.
Just think about the TAM. If I'm going to sell into healthcare, that's all I can sell into. You better crush healthcare because you have no other alternative. Every company I've ever been a part of building has been horizontal, right? So it's not about that. It's what motivates a sales rep? What motivates a sales rep that I want to recruit? Most sales rep, I want to make money. No shit.
Like if I get a guy on the phone, what's your number one motivator? I want to make money. No shit. You got into sales. Is that the only thing that motivates you? Because if that's the only thing that motivates you, we're done here. I have nothing. I have nothing to discuss with you. So can we just say, I know you want to make money. I want to be developed. Oh, now I'm onto something.
I want to be the best software salesperson that I can be, and I want to go work for people that are going to teach me and help me grow my career. That's what I want to hear. I want to sell a product to customers that's world-class, that's going to add value and change the way those customers conduct their businesses. Okay, now we're on to something. You care about product.
You care about development.
Development is key because if you don't care about getting better, then you don't care about your career. What you just said sounds lovely, but salespeople who are good are often good at selling themselves. How do you detect the BS in the, I want growth, development, empowerment? No, I fucking don't. I just want the money.
Super easy. I'm going to pull up your resume. So help me understand, why did you go from this company to that company? What was the motivating factor there? Why did you make that move? Oh, well, they offered me a bigger base salary. We're done. Why did you go from this company to that company? Well, they raised my quota at my current company and I wasn't real happy. Word up.
But if you say I went from this company to that company because I'm interviewed with that leader and I know every CRO, I know every sales organization and software. So I know if you're full of shit. I know who the good sales leaders are.
And if I see you went to a company that I know, AppDynamics, MongoDB, Snowflake, where they have great sales leaders, and you say, oh, I went to work for Chris Dagnon because I knew he was going to develop me. I knew I was going to get better.
I can validate that based on the career moves in your resume. To what extent do you place weight on references? And what I mean by that? A lot. Culture can be different. It can be not suited to someone. Some cultures are suited, some are not. Some leaders are suited, some are not. How do you think about the weight on references and how to do that well and right?
Okay. So the higher up you go. So for a CRO, every CRO, every Sutter Hill company, right? And I've placed them all has been somebody that I know that comes from my ecosystem.
Can I ask a blunt question? There's going to be a lot of people who listen and go, well, that's not going to encourage a diverse set of candidates.
Well, that ecosystem continues to grow, right? And we have a playbook that has expanded and become more and more widely adopted. I'm sure you've heard of Medic or MedPick and all of the things that we use. So that has become more and more widely adopted. But you're right. If you look at my CROs, our CROs across our portfolio, they all come from that ecosystem.
But the problem is most of these guys are now reaching a point where they've made so much money where... They may not want to go back and do this again.
So you have to look for the next generation. This was one of my questions, which was like, it's often said that actually it's so hard being a sales leader. No one in their right mind would do it twice. Is that true? Early stage, 100%.
It's the worst job in software. So we do something unique at Sutter Hill in that we bring in a CRO pre-product. Most people don't do that, and I can explain the justification for it, but we bring people in pre-products. If you look at a good friend of mine, Keith Butler at Observe, amazing guy, we brought him into Observe before there was a product. He's been there for five years.
The company's killing it. He's doing a great job, but he's been there for five years already. I don't want to identify Keith, but if you ask somebody that's gone from – ask Chris Degnan. He's gone from zero. Chris is the only guy that's ever gone from zero to $3 billion. But if you ask somebody that's done that, hey, would you go back to zero? Absolutely not.
Why would you bring in a CRO pre-product?
So the way most companies do it is they, you get an entrepreneur, entrepreneur builds a product, goes and raises some money, builds a go-to-market team, goes out and sells the product, right? Agreed? That's the basic formula. Okay. So how do you know when you're building the product, if you've built the product the market wants? How can you know that?
You think you know, but you don't know. You do customer discovery before and during product build. Who's doing it? Hopefully the founder. Yeah.
Maybe. But what does a founder really know about it? You need a sales expert that can go conduct thousands of phone conversations, that is sophisticated enough to get on the phone with the prospect to say, if we build, and this is evolving, right? As you go from alpha to beta to GA, and then it just continues, right? So the conversations are constantly changing and evolving.
In the early stages, it's just, hey, if we built this, would you get value out of it? Tell me how you get value out of it. What are some of the things you need to see in the product? So That has to take place before you build the product. Otherwise, you could build a product that nobody wants to buy.
Just so I understand, what do you believe that sales leaders or CROs, pre-product, bring that a founder cannot? The extensive nature of the questions they ask?
Most founders, not all, but most founders are product people, engineering people. not salespeople. So as a former VP of engineering, just to pick somebody, is that person the best person to make thousands of phone calls?
Do they have the time, by the way, to make thousands of phone calls and reach out to these people and do those discovery types of conversations and then capture all that data, summarize it, and make sense of it so that you can then give it back to the product and engineering organization? That's not what they should be doing.
And by the way, they're not the best people to do it. So we always hear that actually, you know, you should create the sales playbook as the founder. And then once you have some form of early playbook, you should hire the sales leader.
Yeah, I don't agree with that.
You think that's BS?
I don't want to say it's BS. I think it's backwards. You need a salesperson to create the sales playbook. What does a VP of engineering know about creating a sales playbook?
100%.
They should be involved, right?
And we'll have the CRO bring in the founder to some of these conversations. But again, even if the VP of engineering was super qualified to do it, How are they finding the hours? We're talking about thousands of these phone calls. And you have to reach out to the people, coordinate the phone call, get people that are willing to talk to you, right?
It's a lot of time and effort just to get the conversation set up. Your founder, it's a full-time job. In fact, it's a full-time job for probably a couple of people.
So do you then have to, by nature, raise large seed rounds? Because if you're going to bring in a CRO and a couple of people, this is not a $2 to $3 million seed round.
Yeah, usually you're going to need more than a couple million bucks to do this.
You don't need 20, but you probably need 10. Is that a genuinely viable and realistic option though?
Sutter Hill, we're different. We incubate our own stuff. So everything we do, we incubate inside the four walls of Sutter Hill. So I can't talk to whether or not this is the right formula for others. This is the right formula for Sutter Hill. And by the way, it's one of the reasons I think we're the best in the world at building our own companies.
I agree with that completely. I think the data probably shows that. But once you have that CRO then in place, I'm just intrigued because when we chatted before, you said that you're super passionate about building the right type of sales org. And when you said this, I was like, great. But what does the right type of sales org actually mean in reality? How do you think about that?
So let's think about the CRO that we're talking about. When you're talking to most CROs that they've done later stage deals, the first thing, one of the things you can ask them is, what's your relationship like with the product organization? Who has designed your product roadmap? Where does that come from?
More often than not, what you're going to hear is, oh, I talked to the product marketing people. Okay, well, who designs the product roadmap? Oh, the product organization does. You got problems, right? Because product organization is going to go build what they think the customer wants to buy. The person that knows what the customer wants to buy is the person that's talking to the customer.
It's the CRO. So you need a CRO that has experience and is sophisticated enough to go work collaboratively with the product organization to design the product roadmap and say, look, right now, I'm just making this up. We have 50 ICP accounts. I can only sell into 50 accounts. When you talk to Degnan, in the very early days of Snowflake, we could only sell into ad tech accounts. That's it.
They were just selling to ad tech. So as you want to expand that ICP, in Snowflake's case, beyond ad tech, you have to know, what do I need to expand that ICP? What features? What security things? What does the product need so I can go from 50 ICP accounts to 500 ICP accounts? And so you have to figure out what those features are.
And then you have to come up with a timeline and say, okay, if you deliver these features by this date, then I can expand from 50 to 100 ICP accounts. And if I can expand from 50 to 100 ICP accounts, by the way, I can add salespeople.
So, Mr. Product Guy, I'm going to go hire salespeople based on your commitment to deliver the things we've agreed to in the timeline in which you agreed to deliver it. But understand something. If you fail to deliver, I'm going to have salespeople that can't call on the accounts that they need to call on because we don't have the product to do it.
And so you need a CRO that understands all of this. And by the way, this is where CROs just get jacked. Because they will get pressure from boards, CEOs to say, we need to grow faster. You need to hire more salespeople. Go hire more salespeople. Okay. Well, right now I have 50 salespeople. You want me to go to 100?
Well, in order to go to 100, I either need more use cases inside the existing accounts, or I have to go and be able to sell to other accounts. What are you going to give to me from a product standpoint that's going to enable me to do it? Conversation oftentimes just doesn't happen.
I'm just interested. When we think about kind of moving from 50 ICP accounts to 150, to what extent are the product requests of those sales prospects that we want to add to that ICP profile, to what extent is that product request common and they all want the same thing? What do you do if it's like everyone kind of wants something different and it's like...
So here's a real common mistake. So you hire 10 reps. A rep is going to chase money. So if you don't have ICP accounts, what I never want to see is, hey, I just hired 10 reps. I put a rep in New York, a rep in Dallas, and a rep in San Francisco and Los Angeles, and I told them they can have all the accounts in those geographies. You're in deep shit. Because what's the rep going to do?
He's going to go chase big dollars. He or she is going to go pay. So they're going to go call, hey, I'm going to go sell into Wells Fargo. I think Wells Fargo wants to spend $5 million with us. Oh, really? Okay. That rep's going to spend all his time chasing Wells Fargo. Wells Fargo is going to come back with a list this long of all the shit they need to see in the product.
That rep is going to want to go back to the product organization and say, give me this. Now, what if Wells Fargo is the only person that needs all of that stuff? You've just taken the company and diverted all resources to go build a list of things for a company that may or may not buy. But even if they buy, you've killed the company, right?
Because you've taken all the resources to focus on one account. Even if you get the account, you're in deep shit. So to your point, you have to be able to look at all the data.
That's why I said thousands of phone calls and say, I know through capturing all of this data that if we build these five things over the next six months, I know it will allow me to go from 50 to 150 accounts because I have the data.
Why is sales not doing product marketing if you have a thousand calls? I mean, right. I mean, seriously, just pause. Just let me run with this. If you have a thousand, not literally, but hundreds of calls with customers, you see the words, you see how they describe pain, the things that they look for, what excites them.
You can create the most compelling copy campaigns, billboards, you name it, because you're the ones that live those customer conversations. Why are you not doing product marketing too?
I mean, because salespeople, and by the way, there are some that are, right? Just to be clear. So I have had situations where sales doesn't trust product marketing and will generate their own content. So that does happen. But salespeople, as good as they are, is capturing and understanding the data. That doesn't mean they're necessarily great at creating content.
So what you want them to do is capture all of the information and feed it back into product marketing and let product marketing create the messaging.
Okay. When we think about that right type of sales org, what are the biggest ways that companies go wrong in creating that sales org?
If the CEO does not support the collaboration between product and sales, you got a problem. Now they operate in silos. And what will happen is the product organization will build what the product organization wants to build. Sales guys are struggling to sell it because it's not what the customers want. Product organization says to the sales organization, you suck. We built the product.
You can't sell it. You guys are not good. Sales organization says you built the wrong shit. Now, not only do you have them operating in silos, they don't trust each other. And I've seen this and it does not end well. And it's not that uncommon.
Okay. I'm the CEO and I have this. I have this where they don't trust each other. There is this bad culture between product and sales. Chad, what do I do now? Help me. You've come in. Lead. Lead. Your job as a CEO is to be a leader.
Lead. You have two functions that must collaborate. Get them to collaborate. Get them to understand the need for each other. Sales needs product. Product needs sales. They cannot work independently. And there is a revenue hit. And that's why you want to explain the sales organization needs to explain to the product organization.
If you don't deliver the things that I need, I have a forecast out there that's based on you delivering that product. If you don't deliver that product, I will miss my forecast. So there is a revenue component tied directly into the product organization. And the product organization needs to understand that.
They are, in fact, while not as directly responsible as sales, they're still responsible for revenue. And so as a CEO, you have to understand that and you have to get them to work collaboratively together.
The thing I find just so fucked in sales orgs today is like measuring and incentives. And you said like, you know, tied to revenue there, but then we have some that are like tied to a load of different metrics, whether it's MQLs, SQLs, you name it. And I'm just going like, what is the right way to think about attribution and success within sales teams today?
What behavior do you want? What behavior do you, salespeople are great because they're predictable. I can get you to do whatever I want you to do by setting up the comp plan accordingly.
Would you have different attribution then according to different companies that you work with? Or is it always, we're revenue, we're sales?
Yeah, it can be. You got to look at the business. Let's say you look at a business and say, okay, Our land motion is really good. I'm making these numbers up. The average land sales cycle is four months. We're landing at 75K. That's a good land motion. I'm happy with that. Now, my expand motion is taking 12 months. and I'm expanding from 75, and I'm getting an expansion of 50. That's not good.
The sales cycle for the expand is too long, and the dollar assigned to the expand is not high enough. I can start to pull different levers in the comp plan. So I can say, hey, Mr. Sales Rep, I'm going to pay you 10% on the land. I'm going to pay you 12% on the expand. And just by doing that, I'm going to get a lot more focus on the expand because I pulled that lever.
How big an ACV do you think you have to have to have a proper sales motion to justify it? So my biggest worry today is you see a lot of SaaS companies have 10K ACVs. And actually, Jesus, when you have SDRs, AEs, customer success, for a 10K ACV that has a variability on expansion, it's not enough.
Yeah, that's a problem. So first of all, you have to decide, am I an inside sales organization or an outside sales organization or both? Hopefully both, right? You really want to get both because if you have both, then you can get the velocity business and you can get the enterprise business and you want both. So if you look at a 10K ACV, well, that's definitely not a field sales rep.
If I'm a 10K ACV, then I'm exclusively inside sales and I better be able to keep the cost of sale low. Otherwise, to your point, I can't justify it. The unit economics don't work. And then you have to decide, where do I draw the line between inside sales and outside sales, right? So let's just say you're happy with a 20K deal in the inside sales.
What number are you happy with in the outside sales? And it's sort of a rough benchmark. You want to be able to get 3X. So there's productivity numbers, right? Like productivity is how we measure everything. As sort of a rule of thumb, my reps should be able to generate three times their OTE. So if your OTE is 300, rough numbers, you should be able to get 900K in productivity.
How often do you get that? Well, you better get it or you're not scaling. If you have a field sales organization... and you have 10 reps and the productivity is 600 grand, you better not be hiring. You need to get that productivity.
And until such time as either you get that productivity up or at least can look at the data and see that it's trending in that direction and you trust that data, you can hire ahead of getting the productivity number, but you better trust the data.
How do you think about ramp time? When we think about getting to that 3x OTE, a lot of people say, well, it's enterprise sales. It's very long sales cycles. The ramp time's tough. How do you think about that?
I mean, look, where I want to see it is six months for an enterprise seller. So there's ramp times for inside, ramp time for outside. Inside, I'd like to see 90 days. Outside, six months. Reality is it probably trends more towards nine months in enterprise. Then you have to start peeling back the layers of the onion. Are the sales cycles that long? Maybe the sales cycle is only four months.
Okay, then why is the ramp time nine months? Is it an enablement problem? Is it a product problem? Or is it just the nature of the business and there's nothing we can do about it? But ideally, you want it to be at six months.
Do you think people hire or founders specifically hire sales enablement early enough? And I'm intrigued. What do you think are the biggest mistakes you see founders make with enablement?
So first of all, it should be the CRO's decision, not the founder's. The CRO, if it's 10 reps, you can handle it. Like the CRO can be doing it. The problem is, as you start to scale, it needs to become programmatic. And when it becomes programmatic, your CRO can't do it. He's got other things he needs to be doing. So at 10 reps, do you need an enablement person? Probably not.
And each circumstance clearly is unique. But at 30 to 40, yeah, you better start to think about it. And so you want the messaging and the program to be rolled out uniformly. I don't want managers doing their own thing. So the managers have to execute on the enablement, but they have to execute on the enablement plan that the enablement person has created.
They cannot go off willy-nilly and do their own enablement. And you will see that from time to time.
You said about incentivizing expansions. It made me think of a conversation I had with Chris before when we spoke about CS, customer success. Often customer success are attributed or given the role of expansions and making sure that customers expand as they would want to.
It's a hot topic. I mean, this is an ongoing conversation. It has been for years. Customer success is hard. I don't know that I can look at any one company and say they've nailed customer success. As Chris, I'm sure told you, they don't believe in customer success. They don't have a customer success organization at Snowflake, or at least they didn't. Maybe they've created one now, but they didn't.
The feeling was everybody's in customer success. Do you agree with that? They're NDR. Look, Snowflake has a world-class product. In the early days, it was crazy. Like people would buy a 15K land deal and they'd expand to 150 in six months, right? So when you have product like that, that just expands on its own, you can get away with less customer success. I've not seen that since Snowflake.
I haven't. So do I believe in customer success? I do, right? Now, how do you roll that out? That's an open debate. But do I think you should... What I don't agree with is the rep does the land deal and walks away, and the customer success rep is responsible for expansion. Expansion is sales, right?
But the customer success rep, high level, needs to make sure, okay, number one, is the product being implemented, okay? Have they got the product in? Number two, are they using the product? And are they hitting their utilization rates? Are they exceeding those utilization rates? Are they getting the value?
Is your champion getting the value out of the product that he or she thought they would be getting? Are they going to continue to be a champion for you internally and go talk to other departments so that they come back and buy your stuff? Customer success needs to be managing all that. The salesperson is working, should be working like this with customer success. They should be hand in hand.
You don't always see it that way, but that's the way it should be.
When you see founders today and when you work with companies today, what are the biggest mistakes you see in terms of that relationship between sales and customer success?
you kind of hit on one. One of them is just like, look, let the rep do the land and customer success is responsible at that point. That just also drives really shitty behavior from the rep because the rep is just not focused on the customer journey. The rep is focused on getting a deal done and walking away. You do not want that because then you can get overbooked deals.
So I can go into an account and think, well, let's just say you're on a consumption model. I think that these guys probably need to consume $50,000 in credits over the next 12 months. But I'm paid off of bookings, right? Not consumption. I'm paid off of booking. So maybe they're only going to consume 50, but I think I can get them to commit to 100. Can't fault the sales guy. He wants to get paid.
So he's going to go book $100,000 deal. And then a year from now, you're in deep shit because you booked 100,000. They've consumed 50. And now the account's at risk. You're going to have churn problems. You're certainly not expanding. And so that behavior has got to be worked out of the rep so that the rep understands, look, you've done the land deal. That's the beginning of the journey for you.
The big payout for you is on the expand deal and the further expansions, right? So first and foremost, you need to get the sales rep thinking about the entire customer journey, not just booking a deal and walking away, which is very different than how software sales has been historically, right? When you were selling license deals, you walked in, did the deal and walked away.
It's completely different now.
It completely is different. We mentioned there about kind of Chris, Snowflake, they're not agreeing with CS. I'm just interested because when I spoke to Chris beforehand, he said that you were essentially core to hiring really the entire sales team for the first five years at Snowflake. I just want to dive into that because you mentioned before about the velocity that you had.
What are some of your biggest lessons on what worked first?
So first of all, we talked about being willing to have conflict. There's going to be conflict because each manager is going to have his or her own ideas about the profile and about the process, right? Well, they don't get to have that. If you're going to go hire a world, build a world class sales machine. At scale and quickly, it has to be a well-oiled machine.
And what that means is we have a process. We don't deviate from that process. So I'll give you an example. Sales rep. Sales rep has, call it four interviews. So sometimes you'll get, okay, Mr. Hiring Manager, you interview the rep. Binary. You either want to hire him or you don't. Oftentimes, well, I'm not sure. So I'm going to have him go talk to three of my peers. Nope.
If you can't make a decision on whether or not you want to hire a rep, let's just say you get two interviews. First one's for selling. Second one's for qualifying. If you can't make a decision on whether or not to hire somebody after two hours with them, you're the problem. Not the candidate. It's you. It's binary. Then he goes to the next step of the process. Binary. Moving forward or not.
Next step. Binary. Moving forward or not. And you do not deviate from that process, first and foremost. So oftentimes you'll have a hiring manager say, hey, I really, I like this guy. I want to bring in a sales engineer to get his opinion. Nope. Well, he's going to be working with the sales engineer. I don't care.
If you're going to be in my interview process, you are either uniquely qualified to qualify or you are uniquely qualified to sell. If you are not one of those two things, you are not getting into the interview process. And so you'll see companies everywhere. They're like, we want the person from HR. I got this engineer. What do those people know about hiring salespeople?
Are different people not qualified differently to qualify different skills?
What's an engineer know about qualifying a salesperson? What you're going to go to is culture. Well, we want to see if it's a culture fit. Nope. Because here's the problem you have. Okay. So you bring the engineer in. Number one, it slows the process down. Okay. Number two, there's risk. I don't know what this engineer is going to say to the sales guy. We're recruiting.
He could say something about the product that he shouldn't say. It scares the shit out of the rep. Okay. So there's risk there. Three, say the engineer, the rep candidate interviews with four managers. They all want to hire them. The engineer is like, I do not want to hire them. Now what are you going to do? You're fucking hiring them is what you're doing, but you've just pissed your engineer off.
Well, I don't think you should hire them. Well, we're going to hire them anyway. Well, I don't agree with them. Now you've got friction in the organization. Or are you going to say, okay, well, us four sales leaders like them, but this one engineer knows better than us four sales leaders about hiring a salesperson. I don't think so.
100%.
You have to hire fast. If you're going to go scale, you have to hire fast. But the key is understanding the profile, having somebody on the front end, which... in my earlier days was me. And this is the profile. I'm not deviating from it. Back to the conflict thing I said.
So let's just say you hire a new VP of the East and he has his background and he's got five people he wants to bring with him, which is a good thing because we need to hire. But he has these five people and they don't meet my profile.
If I'm not on the front end or somebody like me isn't on the front end to support Chris and be Chris's eyes and ears, then this VP, because Chris is now running a 400-person organization, he's not interviewing every candidate. He doesn't have the cycles to. This VP is going to go hire five reps that we know don't match our profile. Now, who knows more about which profile works?
A VP that we've just hired that's never sold a product, doesn't know anything about it, or Chris and I who have built the entire sales organization. Well, I would argue Chris and I know the profile better than this person. But this person wants to bring in his five buddies that don't match the profile. I'm sorry, Mr. New VP, not happening.
And I've had many of these conversations, but Chris empowered me.
Does the profile vary depending on geography, client type? ACV size?
Sure, slightly, but I mean, there's just still the core things you're looking for, right? So think about what's the job I'm hiring you to do. Okay, we'll sell software. Okay, it's more nuanced than that. So not to pick on Oracle, but I'm going to pick on Oracle. A rep's at Oracle right now. He's selling software, right? He's selling software. That's what he's going to say.
And I'm going to say, okay, are you doing pipeline generation? Yeah. I'm selling our new X product into all these Oracle accounts that have never brought X product. I'm hunting for new logos. No, you're not.
You're going into install-based accounts, selling a product into them, probably just convincing them to do a wrap and roll saying, hey, if you buy this product, I'll discount the shit out of your existing license to buy this product from me. Now take that versus you're going to go work for Snowflake, a $10 million ACV company. Nobody gives a shit about a cloud data warehouse.
Nobody's ever heard of Snowflake. And I'm going to take that rep and give him 25 accounts and say, go convince those accounts to move all of their data from on-prem to a company called Snowflake they've never heard of. Those are two very different jobs.
Should AEs be responsible for demand gen?
They should get some support. It's a gray area, okay? They should get some support. But if I ever hear that a rep says, well, why aren't you hitting your number? Well, I'm not getting any leads. You ain't going to make it. So yes, they are ultimately responsible for their own lead generation, but they should be supported.
How quickly do you know when you've made a mess hire?
I mean, like I had somebody not long ago say, look, we hired a rep. It's been three weeks. And I'm like, okay, look, if you're going to make a decision after three weeks, there needs to be an HR issue, substance abuse issue. The person is not showing up for work. It's got to be super obvious to fire that quickly. If you're starting to see signs, well, hey, look, you committed to the person.
It's your hire. It's your job to make them successful. So if you're seeing worrying signs, fix them. So I don't want to give you a timeline, right? But when you get to the point of, okay, it's time to change this personnel, it's because you've done everything you know you can do to make the person successful and they're still not getting there.
And you can look at the account list because there are times when you hire good reps into shitty accounts. So you also have to be honest and say, okay, is this just the patch or is this the individual? And a good manager knows this stuff, right? So it's the point in time where you say, I've done everything I can do to make this rep successful.
There's no extraneous circumstances which would be causing him or her to fail. It's time to make the move. The other option is you have a rep that's been doing well, and now they're not doing well. Sometimes, especially at startups, it's a grind being a rep at a startup. You may just lose the will to do it. And so at three years, what happens is you start to see behavioral changes.
Rep's not showing up in every call. I'm looking at the pipeline. His pipeline is light. I'm measuring his number of new business meetings. Those are starting to drop off. I'm looking at the data saying something is happening here. What's happening?
Then you got to dig in. What is the biggest reason why previously well-performing rep turns into a non-performing rep?
There's a lot of factors, but some of it is just when they get tired. I had this debate with one of our CEOs not long ago, and he said, look, I want my reps. Sales reps should love their jobs. They should enjoy their day jobs. And I said, I don't. That's not possible. They can love working for us, and they should. They should love their CRO. I respect my CRO. My CRO is invested in me.
He's developing me. I'm winning, right? Big thing. I'm winning. You're making me successful. So I may not love every aspect of my day job, but I love working for you for all of those reasons. But do I like getting on the phone and making cold calls three days a week and doing pipeline generation? No, I do not.
So having a rep that loves his day job is very difficult in our environment because nobody likes doing pipeline generation. It's not fun. It's a grind. And so what can happen over time is reps wear out. And what you'll see after what can happen is, okay, I've been at a startup for three years and I'm worn out. And then what do they do? They don't go to another startup. They go to a big company.
I'm worn out. I don't want to do this shit anymore. It comes back to reading resumes. Hey, you were at this startup company and you did really well. And then you went to IBM to use an extreme example. You went to IBM for five years. We're never talking. I'm never recruiting you. Not because you're not a good rep, because by that move, I know what I need to know. You're done.
You don't want to do the heavy lifting anymore. Totally fine, but you don't fit into one of my companies.
Are there any other core elements that you absolutely nailed with Snowflake that enabled the velocity, the scaling of that sales machine that we haven't touched on?
You have to get every single person aligned on messaging. Okay. Every person has their own different way of recruiting, but the messaging about the company has to be spot on and uniform. So like when I was at Snowflake, they asked me a couple of times to come up there and record videos of my Snowflake pitch specifically around the equity. Right.
And so Chris and I would set up calls frequently with all of his managers because the data was changing, which meant the pitch kept changing. And so my job was to make sure that every leader, everybody in the interview process had the right messaging down. This is how we sell this shit. And you need to be selling it the right way.
If you get managers saying different things and selling it differently as the reps are going through the process, what happens? You lose credibility. Hey, this manager said this. This manager said this. What the fuck? Now I just don't believe anything you guys are saying. So you got to get that. You got to nail the messaging and it's got to be uniformed.
On the flip side, what did you not do well? When you look back now, you're like, okay, we nailed the consistency of messaging. We nailed the process. What are you like, with the benefit of hindsight, we'd do that differently?
There were times when we were scaling faster where we could have probably raised the bar higher.
Is filling a seat today better than waiting for the perfect candidate tomorrow?
That's a balance. So look, there are many hiring managers out there, CROs in fact, that will say, I have a checklist of 10 things. I'm going to look for the candidate that checks all 10. They will go do 100 interviews and in nine months not fill the position. They'll get desperate and they'll bring in a guy because he has a pulse that checks two out of the 10. I've seen it a lot.
And so to answer that question, it's a balancing act. But when you're hiring at scale, you have to hire. Because if you can't hire, next year's forecast, not this year's, but next year's forecast is shot. Now you're going to the board saying, I got to lower the number. I know we raised off of doing 200 next year. I get it.
I'm sorry, I can't hit 200 because I'm 50 heads behind because I can't hire. Lower the forecast, which usually means the CRO is getting shot. It's balanced, to answer your question. But But not hiring and missing recruiting is not an option.
What have been your biggest mistakes in recruiting? I heard you were the best in the world at sales recruiting. That's something from Spicer.
I work on this today. So I am not afraid of conflict. I don't like it. My wife, I think, thinks I like it, but I don't like it. I'm willing to have it to get to the right outcome. Having said that, I need to work on my diplomacy. As Mike has said to me, look, you're all about saving time and being effective when you deliver messaging, which is correct.
If I have something to say, I'm going to say it. And I probably could say it in other kinder, softer, gentler ways than the way I say it, which would be more effective in the long term than just saying what I have to say and getting it out there. And so my approach, and I do think I've gotten better at this, but I still need to work on it.
My approach in terms of how I communicate and being more diplomatic, I would have done a better job with that in the past and hopefully will do a better job going forward.
Everyone wants to work at a hot company. Snowflake's a sexy company in many respects. And when it was growing super fast as a startup, it was, how do you detect the company, the people who just want to seat on the rocket ship because it's a rocket ship?
No. I mean, I'm sure we hired a lot of people like that at Snowflake. But again, it comes back to when you're interviewing, what are you looking for? Are you looking to be developed? Right? What is your motivation for wanting to come here? Well, it's the hottest thing out there. Okay, I get it. But is that it? Is that all you're looking for? Right? Are you looking for career progression?
Are you looking for development? Or you just want to be a part of something hot? So no, I don't think it's bad. Look it, look it. Databricks, right? Like Databricks is hiring lots of people. Some might argue too many people. We'll see how that plays out. A lot of people are just going to Databricks because it's a hot company, or so they think.
What makes a great sales rep today? And has that changed over time?
I don't think so. I don't think it's changed. I mean, what has happened is it's become harder to find. Why has it become harder to find? Because our world has changed. You know, sometimes I feel like I don't have a place in this, just to be honest. I'm not sure I fit into the world going forward. But why? Why? Well, like we talked about earlier, right?
Like, you know, if I try not to say controversial things here. You can take them out if that. You have to care and be willing to sacrifice to do exceptional things to be exceptional. And what I find today is people are not willing to do that. Hey, what's the culture like? What does that mean to you? Culture to me is I want to go to a place where we're going to win.
I want to go to a place with a world-class sales organization to say I'm a part of something special. I want to go to a place that develops in making me better. I want to go to a place that believes in meritocracy. That's a great culture to me. You ask other people to define great culture. Well, tell me about how you guys view paternity. How much time do I get off of my wife as kids?
Tell me about your benefits. Do I have to be in the office? You know, I like to be home at four o'clock in the afternoon so I can be with my wife and kids. That's fine. Okay. That's the world we live in today. That's not me. And it will never be me. And I will not hire people.
Can you be a truly great sales leader and have balance?
Yeah, for sure. All of us have balance. Every CRO I know that's world-class has wife and kids, but how do you define balance? Chad, you don't have balance. I don't have balance. No, but I'm a great father. My wife would say, everybody, I'm a great father. My kids love me. I'm there for my kids when they need to be there for my kids.
But people sometimes define being a great father or husband as the quantity of time with your family. I define it as the quality of time with my family. When I'm with my family, I'm with my family. Other people say, well, I need to spend X amount of hours with my family, but they're not really present. They're doing other shit.
I prioritize quality over quantity. Is what you're saying, there are much fewer sales people and talent that are willing to give the intensity, the competitiveness, the unwavering commitment that is required to be excellent?
Absolutely.
I'm a founder that you're advising. How do I combat that then, Chad?
I hope somebody can solve it and tell me because I don't know what it is. Recruiting today is harder than it has ever been for the type of rep that we are looking for. For somebody that's willing to put the work in, that's looking for the development that we offer. A lot of reps today just don't give a shit. They just don't care, which is a concept I simply do not understand.
If I'm going to do something, I'm going to go all in and I want to be the best in the world at it. A lot of these people just don't care.
So that's a problem.
What are you doing to solve it? Nothing. I will not budge on the profile, right? Like we will not budge. Like even some of our CROs are like, well, there are certain aspects of the profile that I will not budge on.
And so what happens is... What aspects won't you budge on?
You've got to be willing to put the work in.
Would you budge on remote?
Depends on the function. Inside sales, absolutely not. Somebody said to me the other day, they were building an inside sales team. And he said, look, we require inside salespeople to be in the office. My competitors don't. So they're beating me when it comes to recruiting. Because I'm calling reps saying, you have to be in the office five days a week.
They're recruiting reps saying, no, no, no, you can work from home. So I'm losing. I said, the fuck you are. You're winning and you don't even know it. He said, well, what do you mean? I said, well, let me explain to you. I'm going after salespeople that care about their career, OK? I want the best of the best that are willing to invest in themselves.
Any inside salesperson should recognize that by being in the office, they are going to get better faster. They're going to develop faster. They're going to be better at what they are doing faster. If a sales inside salesperson is not willing to make the sacrifice of a 30 minute commute every day to further his own career, I don't want that person.
So you go ahead and hire, you build your company with those people. I'm going to build my company with the people that are willing to make the sacrifices to do something great. And I tell you what, I'm going to kick your ass.
I love you, Chad. No, one, I totally agree with you. But I also think there's like real information advantages that come from physical co-location, which is like, oh, you hear product talk about the new feature that they're building. You hear customer support talk about problems. You hear those customer conversations.
100%.
So there's certain functions, like an outside salesperson, you can't make them be in the office. I don't want them in the office. I want them in front of customers. Is outbound dead? I mean, look, I don't think it's dead, but people are having to find new ways to do it. What I'm being told, and again, I don't do it, but the feedback I get is emails, LinkedIn simply doesn't work.
There's too much of it. So what I'm hearing is it's gotten back to old school, which was getting cell phone numbers and making phone calls. which I don't think is terribly effective either. But it's, as it's being shared from an SDR standpoint, that is more effective than just messages.
So I think content is the most important thing in the world today when it comes to the sales process. Because I think if you call me and say, hey, I'm here from Snowflake. And I go, oh, I actually loved your guide that you released last month. What can I help with? Suddenly that's a much better sale.
It is, but what if you're a startup? I work for XYZ company. I'm trying to sell this product you never heard from me. Snowflake was your hook there because everybody's heard of Snowflake. So, okay. But what if you're a company nobody's ever heard of? You've got to do really effective content marketing. You do. I mean, I'm not saying it doesn't work.
And by the way, this is where I think AI comes in and helps a lot.
It's also where verticalization helps a lot. If you are selling to restaurants only, I can way more... Totally agree. Because it's customized content, right? And that's why it's so interesting you said earlier, you like the horizontal approach. I love the verticalized approach. I look at Notion and I look at Airtable and I look at all these companies. Actually, question for you.
All of them are trying to scale into enterprise with a PLG motion. I think that's really fucking hard. Getting the world's biggest enterprises to adopt Notion. Are you kidding me?
It's a totally different motion. It's a totally different motion. And the problem, I mean, look, there's a lot of time you can spend on this, but PLG, you've got, I don't know enough about their businesses, but let's just say you've got a low level developer that's bought your product and he's using your product because it's PLG, right? So he's put his credit card and he's using your product.
And now I want to go sell to the CTO. And I have an enterprise rep, totally different motion, right? So it's a completely separate sales organization. So now I've got an enterprise seller in there. I want to go sell to the CTO. CTO probably does not give a shit that he's got a bunch of engineers using the product. It's a completely different value proposition.
And so a lot of people think if I nail PLG, then I'll nail enterprise. You can nail PLG and enterprise. I just would argue that nailing one does not necessarily make you more likely to nail the other. So if you can do both, do both. But you got to, in my opinion, you got to start with direct sales and then let the product get to where the product needs to get through and then go to PLG.
You think it's easier to start with enterprise? I do. Now, I'm not an expert on this, but I do. Enterprise is driven by a go-to-market function. It's an entire function. PLG, yes, has that, but it's largely driven by the product.
One of the biggest mistakes I find founders make that I invest in is they say, too early, we're going to expand into enterprise. They say, oh, we're getting pulled in, we're getting pulled in. And I'm like, you're $3 million in ARR. You don't need to be pulled anywhere. How do you think about timing of the expansion?
So when we build companies, let's go back to Snowflake, we start in mid-market. Because why? Because I want to take a very small set of accounts, typically smaller accounts, because their demands are less. And I want to nail it. I want to build the product to make them happy, right? So like we have another one of my companies, Sigma. People say, well, it's a mid-market company.
It's not a mid-market company. It's an enterprise. We started in mid-market by design because you want to have some set of customers that you can make very happy. And it's always going to be smaller accounts first. As you're making those customers happy, you're learning, as we talked about earlier, about what it takes to make the enterprise happy. And you're building that product out.
So eventually, yes, you will move upstream to the enterprise. But oftentimes, to your point, 10 million, you can't pick a metric and say that's the metric. It's a feel for what you're getting from the customers to understand when the product is ready. But yeah, you see companies go to the enterprise way too fast.
And any company, Wiz is the only one I've seen do it successfully, where they started in the enterprise. But typically, you want to start mid-market, which buys you time to build the product and feature set to go to the enterprise at some later date.
Do you agree with the common statement that your smallest customers will most often be your most painful?
The wrong customers can be your most painful, right? It's not the size of the customer. It's the wrong customer. If you're trying to keep a customer happy that ultimately isn't a good fit, and I don't like churn any more than anybody, but sometimes you have to look at certain customers and say, it's better that we churn this. Churn the account. We can't keep them happy.
We're committing too many resources to keep this small one happy.
Gross revenue retention or net revenue retention? I always have this conversation with Dave. Two different metrics that measure two different things. Which one do you think founders should focus on more? Everyone talks about NRR.
Look, I don't think one is more important than the other. They just have to look, they measure different things. Gross retention tells me if people like my product, right? Like I understand if my gross retention is 90%, I probably have a pretty good product, right? If my gross retention slips down to 70%, I have a product problem. Net dollar retention is about expanding.
So you can have high gross retention and a low NDR. That doesn't necessarily mean you have a product problem. It means you might have a go to market problem. You might have a customer success problem. There could be product attributes that contribute to it. And the GRR measures to me is really about product. NDR is yes, it's product related, but it also ties in a bunch of other things.
So I wouldn't say one is more important than the other. But I will say this, if you have a low gross retention number, by the way, by definition, you're going to have a low net dollar retention number. But if you have a low gross retention problem, you got problems. You can have a high gross retention and a low NDR. And yes, you need to address it, but it doesn't mean you're in deep shit.
But if your GRR starts to slip, you've got problems.
If your GRR starts to slip and the company starts to not do as well, it's tough to have that morale that's still in good shape. It's a problem. How do you advise sales leaders on how to keep a sales team together when you're in a really shit patch and there's not momentum and it's just shit?
It's tough. And the people that are going to see it first are the sales engineers. Sales engineers are going to. And so what will happen is your SEs will start to depart before your reps. And when your SEs start to depart, the reps know that the SEs know more than the reps know about the product. Right. So you'll see SEs start to depart and the reps will start to follow up.
And so, again, it comes back to we talk about operating in silos. So if I'm a sales rep and I'm like, hey, we're losing accounts because we said we were good. Why do you lose accounts, right? So why do you have churn? Lots of different reasons. But you can have churn because we said we were going to deliver something and we didn't deliver it. They bought the product. We committed.
We didn't live up to that commitment. One, two, product just isn't working. That's another problem. Three, they're not getting the value out of the product they thought they would. And so as a sales rep, you're taking this information, you're feeding it back to the product organization. If the product organization is going like this, your reps ain't going to stay.
If the product organization is saying, we got it, we hear you, here's our plan to solve for that, we will deliver on this plan over this timeframe, and then they actually deliver on it, then you can hold the sales organization together. But if they don't, you got a problem. Because the salesperson feels like, I can't win. I go into these accounts, I can't win.
I'm doing everything I'm supposed to do. You've sent me into a gunfight with a switchblade. I'm doing my job. Help me. Arm me. And you're not arming me. You're telling me that I should win with my switchblade. Or more to the point, you're telling me I have a gun and it looks like a switchblade. I'm like, no, I have a switchblade.
I think the challenge I often see is I think CEOs set forecasts or set revenue goals, which are well above the expectations or beliefs of a CRO. And it sets everyone up for failure.
I mean, here's the most common thing, right? CEO says, okay, I got to go raise a round. I want to raise a round this valuation. To get to this valuation, forecast needs to look like this next year. Guess what, Mr. CRO? Here's your forecast for next year. The right CRO. Now, our companies are different. This cannot happen in our company. We will not allow for this, right?
So Sutter Hill Company, CEO says, here's a forecast for next year. We say, great. Chad Peets, John McMahon, your CRO are in agreement with this, right? Because if they're not, that's not the forecast. So there is alignment. We do not do this. This is a mistake we will not allow for at Sutter Hill. Outside of Sutter Hill, CEO says, I got to go do this.
And there are companies you and I both know where this has happened. The CEO, the CRO either has to say, hold on, I am not committing to that. Like he says, or productivity number, right? Like the CEO will say productivity this year is at 750. Next year, it's going to 950. Oh, is it? How is our productivity per rep going to magically go up by 200 grand? Oh, it just is. You can't have that, right?
But those are the different things they do to justify the higher forecast to get the round of funding. It's tail wagging dog. The business should dictate the forecast, not some arbitrary number that we need to raise around the funding, but that is what happens. And so back to the point, CEO says to CRO, here's your forecast for next year. CEOs, CROs got a decision.
You either stand up for it right there or you accept the fact you're getting fired in nine months because you know you're not hitting that number. And I promise you they're going to blame you. And this happens a lot.
How many do you think stand up at the time and say, no, I can't hit that number?
Not enough. Because they want to keep their job. And it's like, look, I'll do everything I can, this, that, and the other. But they know. Same thing with hiring. I got 100 reps. They just told me I got to go to 200 reps. I can look at the data and say, we're not ready to go to 200 reps. CEO says, in order to get to the forecast, we got to go to 200 reps.
What is the biggest way that people fuck up onboarding? I had that head of SDRs from Rippling on the show. She's hired 350 SDRs in a year or two years. That's a lot. Yeah, I mean, no, I'm credit to her. I'm saying that with compliments, but it's like, I'm thinking about the onboarding. It's got to be programmatic and you got to dedicate resources to it.
I mean, too often, as we talked about early stage, fine. Once you're at scale like that, you have to have a programmatic approach. right? And you have to invest in it. There need to be classes. You need to bring them on site. It needs to be an ongoing process that take months that you are in.
Don't get greedy and try to put the rep into a position where you're expecting revenue before you should expect he or she to be enabled. Commit the time and resources and understand it's going to take this amount of time, this amount of resources to get our reps enabled. Do not take shortcuts.
People take shortcuts in discounting. Is that okay? How do you feel about discounting?
You know, again, it varies on the stage of the company, right? Early stage company, look, you'll do negative margin deals, right? Like we're going to do this deal, but we're going to lose money on the deal. But we need the referenceable account and we'll make up for it later.
Do you understand the referenceable accounts actually make a difference?
Early, they make a big difference because, again, you have an ICP where all of the accounts have very similar criteria.
So to your point, if you're verticalized, which we all kind of are in the early stages, right, because we have such a narrow ICP, and you get some well-known account and all these accounts talk to each other and they respect each other and you get a referenceable account, that's meaningful at that stage. Right?
Later on, it's less meaningful, unless it's a really big account, and then it's more meaningful.
Chad, I could talk to you all day. I kind of knew that from the first moment when you said about Wall Street. But I want to start, I'm sorry, I want to finish on a quick fire round. So I say a short statement, you give me your immediate thoughts. Does that sound okay? Sure. What have you changed your mind on most in the last 12 months?
That the world is changing and I need to accept the fact that it's changing and people may not come along with the way that I see with what I think.
Can you not just keep going the way you are just with the same network?
I'm going to try. And if I get to a point where it's like the world doesn't want to operate the way I want to operate, I will likely retire. You don't want to change. I'm not going to change. No, I mean, I will change certain things. I need to be more diplomatic. Look, the thing that keeps me coming to work every day is learning. That's what turns me on. I want to get better every day.
I want to work with people I can learn from every day. So that's kind of changing, but there are certain things I will not change.
What's your biggest advice to someone starting a sales rep role tomorrow?
take the time to invest in your career reach out to people to learn learn as fast as you can and work as hard as you can and you will become better than everybody else around you on the flip side in terms of hierarchy you've got a sales leader and i call you up the night before i'm starting my first like role as a sales leader what would you advise me knowing all that you do now
Understand our business. So when you get here, you need to understand before it, because now you have people reporting to you that are looking to you to add value. Very difficult for you to add value until you understand our business.
So get in front of customers, talk to salespeople, do whatever you have to do to learn our business as fast as you possibly can so that you can start adding value to the reps on your team as quickly as possible.
What's the biggest piece of BS advice that you often hear about sales?
I get tired of hearing people say, look, salespeople are coin operated. And they are to a certain extent. They're predictable, which I like. But I get tired of hearing all salespeople give a shit about us making money. They're mercenaries, this, that, and the other. I think that's bullshit. I think that's bullshit. I think the right salespeople do care about the company.
They care about their careers. Yes, they want to make money, right? But I think the right salesperson is more than about just making money.
What makes Mike Spicer so special? What he's done is unparalleled.
I mean, fuck, I could spend three hours on that. Look, I love Mike because Mike is always going to make the right decision. Always. Yes, he's a good human being. Yes, he's loyal and all that stuff. Mike is never going to take the easy path, ever. He's always going to make the right decision, which may involve pain and doing difficult things. It doesn't matter. He's always going to do it.
He's also... The only person I've ever seen or heard about that is a good stock picker. He understands markets. He can see things around corners that most good stock pickers can, but he's also an operator. I've never seen anybody else that has both of those attributes.
Tell me, what's the biggest mistake you see founders make in scaling to 10 million in ARL? In that first journey, what is the biggest mistake that you see founders that you work with make?
They hire the wrong CRO. Pure and simple. You hire the wrong CRO because you have no idea what you're looking for. There's companies which you would know that I've consulted and I've spoken to their CEOs. And I'm like, what are you looking for in sales? And they have no idea. And in order to make the right hire, you first have to know what you're looking for.
And most of them don't even know what they're looking for. And the problem is they don't have people that they can reach out to to tell them what to look for. I don't fault them for not knowing. The challenge is they don't have investors and board members that can tell them, hey, this is what you need to go hire to.
And hiring the wrong CRO will kill you because then he or she's going to go build out the sales organization that's going to be the wrong sales organization. And it's going to take you two years to figure it out. And then you are starting over.
Final one for you, Chad. What question are you not normally asked that you think you should be asked more?
What's your biggest weakness? I don't know that I've ever gotten.
You've never gotten that?
I get like, because my story is pretty unique, right? Like there's very few people. In fact, I think I'm the only person that's ever gone from being a recruiter and to being a managing director at a venture firm and then starting his own venture. It's not that it makes me better than anybody. It's just a unique path, right?
Like when I went to Sutter Hill and I was sitting at our partner meetings, there was one guy that didn't go to Harvard. That's me. There was one guy without an MBA. That's me. I'm the dipshit that went to USC. So I get questions about the path, but I don't get that question enough, right? Like what's your greatest weakness?
What is your greatest weakness?
it's being patient you know mike has helped me a lot right like when i see what i deem to be an emergency and there's people that have called me to the floor on this rightfully so when i see something to be as an emergency i'm all over it's not hey let's take our time nope this needs to be fixed right here right now and the reality is when you have a hundred different fires you have to learn to prioritize things
And every problem doesn't need to be dealt with today. Some of them can be put off for a period of time. And I have had to learn that lesson. And honestly, Mike has helped me learn that. And so because when you're constantly saying fire, fire, fire, fire, and they are fires, people are like, oh, my God, this motherfucker is calling me again. Dude, we just put a fire out. Can we hold on?
So that's that's probably my biggest weakness is just learning some patience.
Chad, listen, I absolutely love this. I knew when Degnan and Spicer said what they did, it would be a special one. But thank you so much for doing this. And I've so enjoyed it.
Me too. Thank you so much. It's great to meet you.
I mean, I think that's probably the best 20 sales that we've ever done. The thing I love so much about Chad, honestly, is you get so much BS or presentation from most guests on the show. That was raw. It was honest. I thought Chad was fantastic. If you want to see more and watch the full episode, you can on YouTube, of course, by searching for 20VC. That's 20VC.
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As always, I so appreciate all your support and stay tuned for an incredible episode coming on Monday with Imran Khan, the OG of public markets. The man took Alibaba public. He also took Snap public. There is no better person for a public company breakdown.